Electricity market competition will reduce prices, help with summer heatwaves

The Australia Institute, Public Interest Advocacy Centre and Total Environment Centre today welcomed a ‘demand response’ reform of Australia’s electricity market that will improve reliability and reduce prices for consumers.

The groups also welcome the AEMC’s decision to maintain the early, 2021 implementation date for the rule which they had advocated for.

The three organisations, who led the charge for the reform, said they are disappointed the AEMC has closed the door on allowing households to participate in the mechanism.

“Wholesale demand response is a critical reform that will bring much-needed benefits to consumers, and a key part of a secure, zero-carbon energy system,” said Craig Memery, Head of Energy Policy, Public Interest Advocacy Centre.

Dan Cass, energy lead at the Australia Institute said, “Big energy users like factories and farms will be able to earn money by saving energy during heatwaves and at other times when electricity prices are high. This will push down prices for all consumers, improve reliability and help Australia safely retire our 20 remaining coal-fired power stations.”

“We will continue to push for households and small businesses – that is, the other 90% of customers – to be able to reduce their energy costs by participating in the demand response market”, said Mark Byrne, energy market advocate at the Total Environment Centre.

The groups will continue to work with the AEMC to implement the demand response mechanism in 2021 in a way that maximises benefits to consumers and seek alternative means of ensuring households can participate in demand response.

The groups said it is positive the AEMC did not delay implementation of the rule despite pressure from incumbent coal generators and retailers who have used COVID-19 to lobby to push back NEM reforms that would benefit consumers and reduce emissions.

Wholesale demand response is a system where energy users are paid to cut their energy use, instead of turning on more expensive generators, when demand and wholesale prices are high. Participating energy users receive a direct financial benefit, all other consumers benefit from lower wholesale prices, improved reliability and a lower-cost system over the long-term.

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